Business Reference: 50 Free Business Model Examples

Today there are already many real-world examples of free business models in operation.

Below are 50 of them, all variations on the free model.

Free Model 1: Direct cross-subsidy of free services

Give away services, sell products
(Tech support at the Apple Store Genius Bar)

Give away products, sell services
(Free gifts when you open a bank account)

Give away software, sell hardware
(IBM and HP’s Linux offerings)

Give away hardware, sell software
(The home video game console model—equipment such as the Xbox 360 is sold far below cost)

Give away phones, sell airtime
(Used by many telecom operators)

Give away airtime, sell phones
(Also used by many telecom operators: free night minutes and weekend bundles)

Give away the show, sell drinks
(Strip clubs)

Give away drinks, charge for the show
(Casinos)

Free giveaways
(“Loss-leader” offers in retail)

Buy one get one free
(Supermarkets)

Free gifts with purchase
(Cereal products)

Free shipping on orders over $25
(Amazon)

Free samples / experience
(Free sample boxes for new mothers in supermarkets)

Free trial
(Magazine subscriptions)

Free parking
(Shopping malls)

Free condiments
(Restaurants)

Free Model 2: Three-sided markets (one type of customer subsidizes another)

Give away content, sell access to the audience
(Advertising-supported media)

Give away free credit cards, charge merchants transaction fees

Give away scientific articles, charge authors publication fees
(Public Library of Science)

Give away document readers, sell document authoring tools
(Adobe)

Free admission for women, charge men at the door
(Bars)

Free for children, paid for adults
(Museums)

Free listings, paid search
(Some dating sites, e.g., TK)

Paid listings, free search
(Other dating sites, e.g., TK)

Give away travel services, profit from car rentals and hotel bookings
(Travelocity)

Charge sellers to stock goods in stores so consumers can shop for free
(“Slotting fees” in supermarkets)

Charge buyers a membership fee to shop, so sellers can stock goods for free
(Membership warehouse clubs similar to Costco)

Give away home listings, sell mortgages
(Zillow)

Give away content, sell customer data
(Practice Fusion)

Give away content, earn by referring users to retailers
(Amazon Associates partner program)

Give away content, sell physical goods that fit the audience
(Slashdot/ThinkGeek)

Give away content, give paying customers prominent placement within it
(Product placement)

Give away job or apartment listings, charge users to post
(Craigslist)

Give customers free access to content and data, charge companies that access it via an API
(eBay and other high-traffic sites doing business with firms like Tetra Pak)

Give away a limited number of “green” home designs, charge builders and contractors who want to be listed on the green resource site (http://FreeGreen.com).

Free Model 3: Freemium (some customers subsidize others)

Give away basic information, sell richer and more user-friendly information
(BoxOfficeMojo)

Give away general management advice, sell customized management consulting
(McKinsey and the McKinsey Quarterly)

Give away federal tax software, sell state tax software
(TurboTax)

Give away low-quality MP3s, sell high-quality CD versions
(Radiohead)

Give away online content, sell print editions
(From magazines to books)

Charge frequent shoppers less so infrequent shoppers effectively subsidize them
(Membership chains similar to Costco)

Give away video games, charge subscribers extra for more in-game services
(Club Penguin)

Give away business directories, charge companies to “promote” and enhance their listings
(Brownbook)

Give away demo software, charge for the full version
(Most video games let players try the first levels to see if the game suits them)

Give away computer-to-computer calls, sell computer-to-phone calls
(Skype)

Give away free photo sharing, charge for extra storage
(Flickr)

Give away basic software, sell premium features
(Apple QuickTime)

Give away ad-supported services, sell the ability to remove ads
(Ning)

Give away content “snippets,” sell the books
(Publishers using Google Book Search)

Give away virtual tours, sell virtual land
(Second Life)

Give away music games, sell music albums
(Tap Tap Revolution)